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Can exchanges loan my xrp for purposes of shorting xrp?


Alluvial
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Most exchanges, like Kraken, allow margin and shorting I believe.  When an investor has a brokerage account, and has margin privileges, the investor is agreeing that his/her shares can be loaned to the brokerage firm for purposes of allowing another customer to short those shares.  In other words, the other customer borrows your shares and sells them on the market, and you don't even know it.  However, if the investor has a "cash account" and not a "margin account" those shares cannot be shorted. 

If I hold some of my xrp on an exchange that allows for margin, is it possible that I am unwittingly allowing my xrp on that exchange to be sold via shorting (which of course I do not want)?  And if yes, does anyone know if the account holder can disavow the margin privileges for such an exchange thereby preventing those xrp from being sold short?  

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15 minutes ago, Alluvial said:

Most exchanges, like Kraken, allow margin and shorting I believe.  When an investor has a brokerage account, and has margin privileges, the investor is agreeing that his/her shares can be loaned to the brokerage firm for purposes of allowing another customer to short those shares.  In other words, the other customer borrows your shares and sells them on the market, and you don't even know it.  However, if the investor has a "cash account" and not a "margin account" those shares cannot be shorted. 

If I hold some of my xrp on an exchange that allows for margin, is it possible that I am unwittingly allowing my xrp on that exchange to be sold via shorting (which of course I do not want)?  And if yes, does anyone know if the account holder can disavow the margin privileges for such an exchange thereby preventing those xrp from being sold short?  

As far as I know all the exchanges supporting margin trading also have a lending mechanism, where users decide if they want to lend their money for interests. I'm not aware of exchanges that offer margin without lending, but in case the lending should be done with the exchange funds. The problem is that the "exchange funds" are just a local ledger where they can do whatever they want. The "real" XRP are always on the cold wallet, so no real XRP should be used to short.

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I wrote about this around a year ago here.

You should be able to search their terms of use for key words.

If they are lending crypto, they should be paying interest. Just like Banks pay interest on CDs to lock in deposits, so they can be lent out.

Edited by KarmaCoverage
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